As the EU steps up its efforts to increase the spread of high-speed internet across Europe, the Commission and the incoming French Presidency yesterday (25 June) outlined their strategy to boost investment in Next Generation Access Networks (NGANs), the main infrastructure for broadband. Universal access to internet is a key priority for France.
Anticipating proposals expected before the summer, EU Information Society Commissioner Viviane Reding said yesterday that she is in favour of setting a “risk premium of around 15%” to reward operators investing in high-speed internet infrastructure.
Under the plans, companies investing in fibre networks would be able to charge extra fees to competitors wishing to use their infrastructure.
However, the Commisison remains divided on the issue and is still “discussing the final details” of the proposal, Reding said at a workshop organised in Brussels by ECTA, the trade association representing new telecoms operators.
Neelie Kroes, the commissioner in charge of competition policy, is particularly sceptical about Reding’s suggestion. “As of today, the Commission is not in a position to accurately quantify this risk premium,” Kroes said according to the FT, adding that it would be “counterproductive” to fix a single rate of return across the whole of Europe.
French EU Presidency to focus on social aspects
At the ECTA workshop, Emmanuel Gabla, the director of the IT section within the French Economics Ministry, underlined that NGNs are among the priorities of the French EU Presidency, which starts in July. He said France had already made a decision to equip every new house with fibre cables from 2012.
The French Presidency will also focus on the potentially negative social consequences of the prospective new investments. Indeed, uneven deployment of NGANs risks widening the digital divide, Gabla said. Universal access to broadband will therefore be a key target for France, he added.
The best model to invest in NGANs must still be found but Sweden is emerging as an example that could be replicated. With a demographic density of just two inhabitants per square kilometre in some areas, Sweden is now third in the world in terms of broadband penetration – after Japan and South Korea – thanks to equally shared public-private investments.
In the rest of Europe, it is clear that there will be a need for public money to cover remote zones but it is still not certain who in the private sector will bear the costs. A study released at the ECTA conference and prepared by WIK Consult underlines that incumbents have a structural competitive advantage in the nascent broadband services market. Therefore, it should be up to them to invest in the new networks, the study argued. But ETNO, the association which represents incumbents’ interests, dismissed the findings as premature.
EU Information Society Commissioner Viviane Reding announced: "We want to encourage investment into next generation access networks by a stable and predictable regulatory environment. We are still discussing the final details of this in the Commission, but I believe that the best way for encouraging long-term investment is to establish a priori a number of principles that national regulators should take into account when regulating access prices with regard to next generation access networks. In my personal view, these should include a risk premium of around 15%."
Emmanuel Gabla, the director of the IT section within the French Economics Ministry, called for "high-speed access for all" and explained that "the priorities of the French Presidency in this sector will be NGN, the internet of the future and universal access to broadband".
Socialist MEP Catherine Trautmann, Parliament's rapporteur on the revision of the telecom framework directive, agreed that in her party at least, it is already recognised that "access to broadband is like a universal service".
Commenting on the WIK Consult study, Innocenzo Genna, the chairman of ECTA, said: "ECTA is calling for mandatory access to fibre networks to be included in the European Framework for Communications, in exactly the same way that unbundling of copper networks is currently mandatory. Without the appropriate regulation in place competition in Europe's broadband market will be threatened, ultimately jeopardising Europe's future economic growth”.
ETNO spokesperson Thierry Dieu considered this assessment of a nascent market to be "too premature", underlining that in any case alternative operators currently have a larger share of new access network roll-out than established operators - 64% of the fibre customers connect through alternative operators compared to 10% through established operators, according to IDATE - and dispose of an average broadband retail market share of more than 50% throughout Europe.
Optical fibre backbones are considered the future of telecommunications infrastructure because they allow for faster and wider transmission of data. They are at the core of so-called Next Generation Networks (NGNs).
Fibre networks have been deployed slowly across the EU so far, covering a marginal share of national markets. NGNs today account for less than a million subscribers in the EU, in comparison to between 1.5 and three million in the US, 2.8 million in South Korea and eight million in Japan.
Investment in Europe is currently low. To upgrade EU networks, at least 300 billion euros of investment will be necessary, according to estimates by McKinsey, a consulting company.
- Before the summer, the Commission will issue a draft recommendation on NGANs.
- 8-9 Sept. 2008: The French EU Presidency organises a conference in Paris on the i2010 strategy, which will focus on NGNs.
- By the end of 2008, the Commission is expected to translate the draft proposal into a legal text.
- European Commission:Reding's speech at ECTA(25 June 2008)
Business & Industry
- ETNO:Position on NGNs(7 may 2008)
- ECTA:Position on NGNs(18 february 2008)
- EICTA (digital technology industry)Position on NGNs(20 May 2008)
- EURACTIV.sk:Vysokorýchlostný internet pre všetkých(26 June 2008)